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Top lottery conglomerates slapped with GST evasion cases

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India’s top three lottery distributors: Essel Group, Martin Group and Sugal & Damani Group have been slapped with cases for evasion of Goods and Services Tax (GST) as per a report in the Times of India.

As per the news report, the Central GST (CGST) Commissionerate-Ludhiana registered cases against Future Gaming and Hotel Services Pvt. Ltd. (Martin Group); E-Cool Gaming Solutions Pvt. Ltd. (Essel Group); Pan India Network Limited (Essel Group) and M/s. Skill Lotto (Sugal & Damani Group).

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The GST evasion cases were reportedly registered by the central tax department in Punjab for non-payment of the correct rate of GST; non-filing of GST returns and collection of GST from customers but not depositing it to the treasury.

In the case of Future Gaming, the company failed to pay GST at the rate of 28% and instead computed its GST liability at the rate of 12%. It further did not deposit GST collected from customers and also failed to file its GST returns. The total liability for the lapses by the company is said to be around Rs. 6.91 crores.

As per media sources, the company gave an undertaking to pay the differential amount and also stated that going forward, it would pay tax at the rate of 28% on online and paper lotteries sold by it in Punjab and other states.

E-Cool Gaming Solutions on the other hand, allegedly did not pay GST at the rate of 28% and instead computed tax at 12%. The liability for this incorrect computation was around Rs. 4.30 crores.

Tax officials also detected an anomaly of Rs. 28 lakhs in the computation by Pan India. Officials of Essel Group reportedly admitted their total liability of Rs. 4.58 crores and paid Rs. 50 lakhs while giving an undertaking to pay the balance arrears at the earliest.

The central GST officials also detected a liability of at least Rs. 2.50 crores in the case of M/s. Skill Lotto which had under payed taxes. Probe on the exact nature of the evasion by M/s. Skill Lotto is ongoing.

In June 2017, the GST Council had announced a dual rate of GST for lotteries, wherein state lotteries distributed by private companies would attract a 28% GST on the face value of lottery tickets, while lotteries marketed and distributed by state governments directly would see a 12% tax rate on the face value of tickets.

Private lottery companies have made several representations against this discriminatory and high rate of tax, and claimed that the taxation structure would cripple and destroy their business. The central government and GST council have so far, however, not yielded to the lottery companies’ demands.

Jay has researched extensively on gaming laws and has been cited by various media houses and journals as an expert. He has helped leading newspapers in their stories on gaming laws. Jay completed his B.A. LL.B. (Hons.) degree from NUJS, Kolkata in 2015 and is currently based out of Mumbai.